Focus on the Four Stages of Wealth to Reach Full Potential

Jul 23rd 2012
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By Tony Batman, chairman and CEO, 1st Global

Now more than ever, clients approaching the retirement red-zone want to consolidate their financial services with a single trusted advisor. They want a firm that has the ability to craft solutions for a wide spectrum of financial planning and tax issues. A holistic approach focusing on all areas of wealth management will help you meet this challenge and weave diverse elements into a unified, comprehensive plan that clients need and value.

As CPAs or tax professionals, you have an inherent, even unfair, competitive advantage over other financial service providers. This advantage lies in your mature client base, the trust those clients have in your firm, and your commitment to always doing right by them. Your unparalleled tax knowledge and detailed understanding of your clients’ complete financial picture is another unique advantage.

However, many CPAs and tax professionals never reach their full potential of client services because they fail to adequately integrate comprehensive planning into their traditional client service offerings. Often these efforts stall somewhere between acting as a packaged investment product provider and serving as a comprehensive wealth manager. While most firms start with a basic service model of access to financial and investment products, only those firms that continue to add specialization, complexity and integration based on a total client service approach arrive at a holistic and very profitable wealth management model.

Let’s start with a clear definition of what holistic wealth management is. Holistic wealth management focuses on four stages of wealth:  accumulation, protection, distribution and transfer. Holistic wealth management is a philosophy for managing client relationships and a system for delivering financial guidance to your clients that takes into consideration how various areas of wealth management are interrelated. To encompass all four stages of holistic wealth management, firms must be proficient in 10 key areas of financial concern:

· Tax Planning – This is the foundation of any wealth management business and how CPA firms differentiate themselves from traditional financial advisors who work with high net worth clients. Tax planning provides frequent opportunities to communicate your wealth management value proposition to your clients.

·  Investment Planning – Wealth management firms must use sharp, pointed questions to help clients create a blueprint for investment success. Proper investment planning must be based on each client’s investor profile: the specific goals, time horizons and risk tolerance for that individual client.

·  Retirement Planning — Retirement planning affects all of your clients, whether they are individuals planning for their own retirement or business owners wanting to establish a retirement plan. An individual’s retirement planning should be approached from three fronts focusing on employer-sponsored plans, Social Security or other government programs, and individually owned plans.

·  Income Protection and Asset Preservation – Your professional responsibility doesn’t end with building your clients’ wealth. You must help them protect it. To make appropriate recommendations for protecting income and preserving wealth, you need to understand the sources of your clients’ income and the location of their assets, both now and in the future.

·  Education Planning – Few of life’s essential elements have increased more over the past decade than the cost of higher education. The education planning process begins with defining your clients' goals for their children (or grandchildren), then determining a plan of action to reach those goals. This planning process involves asset allocation, tax planning, estate and generation-skipping planning, asset protection planning and financial aid considerations. Once the plan is implemented, it must be monitored to ensure the goals are achieved.

·  Insurance Planning — Insurance planning can help your clients answer the difficult question, “How will my family members and dependents manage financially if I die or become disabled?” It’s a subject many of your clients may not want to think about. But if a loved one depends on them financially, it’s a topic they cannot avoid. Insurance protects your clients from having to abandon or compromise their future goals if the unexpected occurs. You can help your clients plan for the unexpected by uncovering their needs, answering their concerns, and crafting an insurance plan to protect their financial goals.

·  Estate Planning – Regardless of your clients’ overall net worth or whether they think their estate will be subject to an estate tax, there are several non-tax reasons to fully engage your clients on the subject of estate planning. Beyond minimizing the tax bill, you can help your clients craft an estate plan that addresses many vital issues, such as who gets what, when and how much; who’s in charge; charitable intent; and end-of-life considerations.

·  Business Planning – The majority of business owners have no written succession plan. If their wealth is tied up in their business, this lack of formal succession planning could be financially and emotionally devastating. Read why succession planning is key for small business owners.

·  Debt Management – Certain types of debt, such as home mortgages, car loans and education loans, are unavoidable for most of your clients. Other “elective” debts, such as credit cards or outstanding loans, can risk your clients’ financial future. Getting discretionary debt under control quickly should be your clients’ No. 1 priority so they can obtain the funds necessary to focus on their comprehensive wealth management plan.

·  Special Situations — Special situations refer to any type of life event, such as divorce, elder care or even addiction, that forces dramatic change and places financial and emotional stress on your clients and their dependents. Planning for special situations requires wealth managers to use their insurance, investment and tax planning skills to create an effective solution.

Each wealth management issue cannot be treated in isolation. For solutions to be truly efficient, you need to understand how your client’s financial issues are interrelated. For example, an investment solution cannot be recommended without considering the client’s tax situation. The ability to synergize solutions within the framework of a comprehensive wealth management plan is where you truly add value to your clients and make a difference in their lives.

1st Global Capital Corp. is a member of FINRA and SIPC and is headquartered at 8150 N. Central Expressway, Suite 500 in Dallas, Texas 75206; (214) 265-1201. Additional information about 1st Global is available via the Internet at

1st Global was founded by CPAs on the belief that accounting, tax and estate planning firms are uniquely qualified to provide comprehensive wealth management services to their clients. Each affiliated firm is provided with education, technology, business-building framework and client solutions that make these firms leaders in their professions through dedicated professional client relationships built around wealth management.


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By Khalid
Jun 25th 2015 20:10 EDT

Quite a resourceful insight into this hotly needed topic to most of my near-to-retire clients. A job well done.

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